Yield Hunters Lured by Junk Bonds Even as Defaults Pick Up
- JPMorgan says 12-month default rate could reach 2% by year-end
- Hunt for juicier returns may attract investment-grade buyers
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Investors are rushing to buy high-yield bonds in Europe at a time when the number of issuers defaulting has reached the highest level since 2010.
The 12-month notional-weighted default rate could rise to 2% by year-end compared with 0.6% a year ago, according to analysts at JPMorgan Chase & Co. Meanwhile high-yield funds with a European focus have attracted inflows for five consecutive weeks totaling 2.7 billion euros ($3.0 billion), the analysts said citing the bank’s own data.